The Central Government would like the Goods and Services Tax (GST) Council, slated to meet later on this month, to address the disturbance in India’s export sector on account of the US withdrawing preferential trade terms and a continuing global slowdown by changing the GST rate on products which comes heavily in India’s export basket.
There is a strong need, among others, for minimizing GST on auto parts and some textile goods, which the Central Government is likely to help. It will also be pitching for a single authority to process GST refunds.
“The complete idea is to minimize the time for refunds. Exporters’ main grudge has been that they are constantly facing a liquidity problem as refunds do not come on time and impatient suppliers in the global supply chain are not willing to wait for payments, asking Indian exporters to borrow at high costs,” as per officials.
When some auto parts are currently taxed at 18%, others are taxed at 28%. The Automobile Component Manufacturers Association has been asking that all auto parts be uniformly taxed at 18% for some time. The auto-components industry sums for 2.3% of India’s Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly. Planning is going on to reduce GST on some textile product lines which are now taxed at 18%to 12%, as well as on finishing agents such as dyes etc., used by the textile industry in order to help the sector which earned about $38 billion in 2018.
The centre may also make a case before the Council for the requirement to bring in at least some petroleum products into the GST ambit.
Officials said that there are three types of petroleum products: Industrial fuels such as crude oil used as industrial inputs; transportation fuels like petroleum, diesel, aviation turbine fuel and household fuels like kerosene and LPG. “The complete range of petroleum products is taxed at multiple areas in the country… Central excise and state VAT are among these taxes. To go on top of it, there is no input tax credit for the industry,” pointed out Sumit Dutt Majumder, former chairman, Central Board of Direct Taxes. “There can be a case for industrial fuels which are used as inputs being brought under GST,” he added.
high gst rates
some auto parts are currently taxed at 18% and others at 28%. The Automobile Component Manufacturers Association has asked that all auto parts be uniformly taxed at 18% for some time. Meanwhile, the textile industry has been seeking a deduction in GST on some textile product lines which are now taxed at 18%, as well as on finishing agents such as dyes etc., which are used by the sector which earned $38 billion in 2018